Charles W. "Chuck" Jones III’s Post

As the US cut proposed bank liquidity buffers by 50% of their original amounts, pressure will now come on Swiss regulators and others who had proposed higher buffers for their own banks to follow suit. Many may consider these measures rash on first consideration. However, the events of 2023 demonstrated that ample liquidity buffers did nothing to ease investor or client concrlerns when confronted with social media driven speculation of a bank's weak solvency or rumours of AuM flying out the door when combined with mobile digital banking services. The only real chance a bank has in these circumstances comes from robust governance and the employment of effective strategic risk management, such that management are prepared and know immediately how to respond with a sufficiently powerful message to counter the speculative rumours convincingly. Central to this effort is engendering trust. For trust must now become the new currency for banks where qualatative measures, like liquidity buffers, capitalisation, etc, have failed. #liquitybuffer #capitalisation #trust #strategicriskmanagement https://lnkd.in/gNgdEavE

🏦 Bloomberg reports that Fed Vice Chair for Supervision, Michael Barr, will preview the latest updates to the bank capital rules today. The anticipated impact on large banks has been revised down to 9%, a significant drop from the initial 16% proposed in July 2023. This shift comes after extensive feedback from the banking industry, highlighting concerns over the potential consequences of overly stringent regulations. Excessive tightening of capital rules could reduce lending and liquidity from banks, ultimately shifting financial activities—and risk—toward non-bank entities. #banking #regulation #riskmanagement #capitalrules

"The Fed and two other federal regulators are moving toward a plan that would significantly lessen a nearly 20% mandated increase in capital for the biggest U.S. banks, according to people familiar with the matter." There are two components of the proposal's burden. The increase in amount of capital required and the increase in the costs to calculate and monitor compliance with the requirements. Unless the requirements have been drastically tailored for Category III and IV banking organizations (e.g., market and operational risk calculation infrastructure, defaulted exposures tracking), I doubt the latter burden has been fixed. #BaselIII https://lnkd.in/eb5gUHMv

🏧 Global systemically important US banks have filed a flurry of last-minute comments on the Fed’s Basel Endgame proposals, warning of “adverse consequences” such as pulling back from public markets and lending cuts. 💲 It was inevitable that the banks would fight back against the Fed’s plans to hike capital requirements, writes Nicholas Dunbar of Risky Finance. But with JPMorgan alone now the most profitable lender in US history after posting record profits of $49.6bn for 2023, the banks may be conceding that higher capital is inevitable. 📢 After initially making dire blanket warnings at the start of their comment documents, the banks then assume the Endgame will go ahead. 💹 Instead, their submissions then focus on persuading the Fed to compromise by tweaking parts of the rules that target their trading activities and fee-based businesses. 🗣 To find out more about what was said, read Nicholas' insights here👇 https://lnkd.in/dwCY9UWq

Join me, John Geiringer and my colleague Zain Tariq on Feb. 22 for a deep dive into the regulatory environment and hot button issues facing banks. We'll discuss how the regulatory landscape and competitive environment has changed since the liquidity crunch in the spring of 2023, what drives banks to brink and how regulators react to troubled institutions as well as our outlook for bank #deposits, #liquidity and commercial real estate exposures. #CRE #regulation #banking Register now: https://ow.ly/WkHj50QxQF6

🔍 Insightful Read on Bank Runs and Regulatory Challenges 🔍 A year after the significant market disruptions, the issue of bank runs remains a critical focus for regulators worldwide. In the below article from Risk.net, the ongoing efforts to devise robust solutions and safeguards against future bank runs are thoroughly examined. The US’s acting comptroller of the currency, Michael Hsu, thinks he has an answer. Or rather, two answers, to be precise. 📰 Read the full article here: #Banking #Finance #Regulation #RiskManagement #FinancialStability

As Basel III bank capital reforms wind their way through national reviews and implementation plans, the US response to regulators proposing new capital requirements is instructive, especially for Canadians, who have already seen important pieces of Basel III go-live (FRTB): In the US the pushback from banks and both sides of the political spectrum is vocal, focused and raising eyebrows. #baseliii #frtb #bankingindustry #bankingandfinance #capitalmarkets

It was a pleasure joining Becky Quick on CNBC Squawk Box this morning to discuss important banking industry news. In my view, this is an inflection point for banks as they navigate an economic “soft landing”. We’re looking for orderly interest rate cuts, a reversal of the inverted yield curve, and also expect modest revenue growth for banks in the second half of the year. #InterestRates #FederalReserve #BankingSector #BankingIndustry #Regulation

This on going discussion on Basel III - enhanced capital requirements for banks - is interesting. It is never black and white, and I suppose that most banks have good arguments to try to push back or to water down the new regulation. However, I am part of the generation who lived the 2008 meltdown. So instinctively when I read about new instruments that allow to create liquidity on non liquid or even defaulted assets, I tend to ask myself: “ how is it different this time?” And “have lessons truly been learned?” “Do you remember the infamous CDS (credit default swaps)”? What do you think? I will be especially interested to know the view of bank CAEs… #banking #regulation #risk

The (not so) hidden risk of the American banking system ...  ... but despite the systematic mismanagement, they want to hold as little equity as possible (=>https://lnkd.in/dMgtjF5N) ... (c) https://lnkd.in/dhreGyJN, the report highlights the huge amount of duration risk that remains hidden on the books of US banks because of the industry trend since 2008 to retain securities in 'held to maturity' instead of available for sale. ... The situation is probably similar in Europe.